Albo’s ‘plan’ for second term won’t fix Labor’s economic credentials

Right now, it’s hard to escape the sense we are just managing our decline.

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So that’s it? Labor’s second-term agenda is to have a meeting in ­August to talk about higher productivity, even though the Albanese government’s main contri­bution to productivity so far has been increased energy costs because of its climate obsessions and harder-to-manage workplaces because of its union loyalties.

Does anyone really think a government that was deaf to economic logic in its tentative first term will have found wisdom now that it thinks it has been vindicated by one of the biggest ever parliamentary majorities? Because right now, it’s hard to escape the sense we are just managing our decline.

Exhibit A for the near impossibility of getting any economic improvement out of this government, however many talkfests it hosts, is its dogged insistence to tax unrealised capital gains in super funds worth more than $3m.

As well as being poison to start-up businesses’ venture capital needs, this “soak the rich’” prejudice indicates a total failure to grasp the ­investment mentality that strong market economies require.

For eight of the past nine quarters, Australia had negative economic growth per person, our productivity has fallen back to 2016 levels, and real disposable incomes (after taxes and housing costs) are down some 8 per cent over the past three years.

We’ve masked economic stagnation and pumped up overall growth figures (but not GDP per head) with record migration largely driven by selling immigration rather than education.

In the process, we’ve dumbed down the schools and universities whose intellectual drive is crucial for our long-term future, and reduced the incentives for businesses to increase productivity. As well, we’ve stored up trouble by gaining migrants keen to take advantage of life here but sometimes with little understanding of the ­society they’ve joined, with its ­Judeo-Christian ethos.

In his National Press Club speech, laying out his plan to have a plan by having a conference to talk about a plan, the Prime Minister declared that “not every challenge can be solved by gov­ernment stepping back”. That’s pretty much the heart of our recent malaise.

To the Labor Party, government stepping forward does seem to be the solution to every problem, including problems that are only problems because these lovers of big government can never leave well enough alone.

Albanese Labor epitomises the kind of government once satirised by Ronald Reagan when he was president of the US: “If it moves, tax it. If it keeps moving, regulate it. And if it stops moving subsidise it.”

Thanks to this government, we have massive increases in the costs of childcare, aged care and disability care because it has mandated big wage increases for privately employed workers without any efficiency trade-offs, so much so that the “care economy” is about the only area of employment growth.

And we’re drowning in bureaucracy because Labor’s instinctive response to every crisis, real or confected, is to intervene even where there is no role for government.

That’s why the federal government is now three percentage points of GDP bigger than before the pandemic and on a path of relentless expansion without the economic growth to pay for it.

Meanwhile, the Trump-driven disruption to global trade – whatever its long-term merits in decoupling from communist China and restoring the US’s military industrial base – is deterring investment and dampening global growth. Any presidential plan to stop China overtaking the US economy will have big consequences for us, given that it’s China’s breakneck expansion that’s consumed the iron ore, coal and gas exports that are the main source of our wealth – but which the green zealots want to stop.

We’re drowning in bureaucracy under Treasurer Jim Chalmers. Picture: Martin Ollman/Newswire

Then there’s the extra military spending the new administration is demanding as the price of ongoing security guarantees.

The US alliance that’s given us defence on the cheap for the past two generations won’t survive under an Australian government that can’t even name China as a strategic challenge (the PM choked on this again at the Press Club), won’t spend anything like 3 to 3.5 per cent on defence, and won’t accede to even the most minimal request for military assistance.

Under this government, our only value to the US will be the joint facilities in Darwin and at Pine Gap, as long as these remain useful. The PM thinks he can get away with military torpor by offering the Trump administration access to strategic minerals and rare earths, but there’s fat chance the green movement will allow any of this environmentally difficult work to take place here, which is why most of it migrated to China in the first place.

Partly, we’re in this mess because our leaders think voters can’t handle hard choices. Labor has supported ever bigger government because that’s its instinct, while the Coalition has largely gone along with it because it’s ­concluded there are no votes in calling time on unsustainable spending.

Witness the Coalition me-too-ing almost all Labor’s giveaways in the recent campaign. Scott Morrison even tried to half-justify this Labor-lite approach, in accepting his gong this week, by claiming the pandemic might have permanently altered people’s expectations of government.

Yet it hasn’t always been this way. After getting elected on a platform of “bringing the nation together”, the Hawke government surprised on the upside by deregulating financial markets, cutting tariffs, introducing enterprise wage bargaining and beginning privatisation. Bob Hawke and Paul Keating understood, in a way few of their predecessors did or successors have, that a more efficient economy with more profitable private businesses is the key to more fairness because only a successful business can afford to pay its workers more.

Then John Howard and Peter Costello continued the hard task of economic reform – in the teeth of ferocious opposition from a Labor Party that had reverted to type.

They reformed the waterfront, all but eliminated federal government debt, reformed the tax ­system, tackled unconditional welfare spending, cut red tape, and made it much easier to manage large businesses.

Ronald Reagan with his wife Nancy on the South Lawn at the White House in 1986. Picture: AP

Unsurprisingly, the Hawke-Howard era now seems like a golden age of prosperity. But none of this happened by accident. It was the product of strong leaders capable of making tough decisions and arguing a strong case.

It helped that there were also business leaders with more backbone than today who would support specific changes rather than just bleat about the need for ­reform in general.

When even the British Labour Party is spending big on defence with its commitment to 3 per cent of GDP and announcing this week it is ushering in “a new golden age of nuclear” with a £14bn ($29bn) commitment to emissions-free baseload power, you have to wonder how its Australian political cousins have got it so wrong.

Energy is the economy; economic security is national security; and national security should be the focus of all those in a position of influence, public or privately employed. Because this is the challenge of our age.